Item 2. PROPERTIES

Note – Information in this section is as of December 31, 2017, unless otherwise noted.

We own the following facilities in Winona, Minnesota:

(1) Total number of tote locations for small parts storage included in facilities with an ASRS.

We own the following facilities, excluding selling locations, outside of Winona, Minnesota:

(1) Total number of tote locations for small parts storage included in facilities with an ASRS.

(2) This property contains an ASRS with capacity of 52,000 pallet locations, in addition to the 561,000 tote locations for small parts noted above; 105,000 of these small part tote locations are located in the industrial vending automated replenishment facility, which is also located on this property.

(3) This facility contains an ASRS with capacity of 14,000 pallet locations, in addition to the 41,000 tote locations for small parts noted above.

(4) Construction of an ASRS began in 2017 at our Kansas distribution center, and we expect this project to be completed in the first quarter of 2018. This facility will contain approximately 170,000 tote locations.

In addition, we own 179 buildings that house our in-market locations in various cities throughout North America.

All other buildings we occupy are leased. Leased branches range from approximately 3,000 to 10,000 square feet, with lease terms of up to 60 months (most initial lease terms are for 36 to 48 months). In addition to our leased branch locations, we also lease the following facilities:

(1) We currently own land in the Seattle, Washington area for the construction of a new distribution center, which is scheduled to begin in 2018, and when completed, will replace the current leased facility.

We currently own land for future distribution center expansion and development. If economic conditions are suitable in the future, we will consider purchasing branch locations to house our older branches. It is anticipated the majority of new branch locations will continue to be leased. It is our policy to negotiate relatively short lease terms to facilitate relocation of particular branch operations, when desirable. Our experience has been that there is sufficient space suitable for our needs and available for leasing.